Reports Significant Commercialization Progress
and Technology Advances
Holds Conference Call Today, March 17th, at 8:00
a.m. Pacific Time
Clean Diesel Technologies, Inc. (Nasdaq:CDTI) ("CDTi" or "the
Company"), a leader in advanced emission control technology,
reported financial results for the fourth quarter and year ended
December 31, 2014.
Chris Harris, CDTi's President and CEO, stated: "During 2014 we
began transforming CDTi from an emissions control manufacturer into
an advanced materials company. We unveiled our breakthrough Spinel™
technology platform and we also launched DuraFit™ to take advantage
of the emerging market in replacement filters and to drive
near-term sales. Meanwhile, our legacy diesel retrofit business
declined much more than expected impacting our financial results
for the fourth quarter and full year 2014. In the third quarter we
realigned resources resulting in annual cost savings of $1.2
million. Retrofit sales appear to have stabilized, albeit at a
lower level, and we expect DuraFit™ sales to ramp up and begin to
substantially replace retrofit sales over the course of 2015.
Despite the disappointing financials, we are pleased with the
progress we have made executing our commercialization strategy and
advancing our technology initiatives."
Commercialization Progress
- Began supplying catalysts for Honda's new Acura ILX model,
demonstrating CDTi's continued technology leadership and strong
relationship with its key OEM partner.
- Established a strong independent distributor network for
DuraFit™, extending CDTi's reach into additional sales channels.
Expects to secure its first major fleet sale by the end of the
first quarter.
- Amended agreements with Japanese partner Tanaka Holdings Co.,
Ltd. and its subsidiary Kikinzoku Kogyo K. K. (TKK) enabling CDTi
to broadly commercialize its catalyst products in the high-growth
Asia-Pacific region pursuant to a royalty arrangement.
Technology Advances
- Initiated on-vehicle testing of Spinel™ and other innovative
materials on multiple light- and heavy-duty OEM engine
architectures using industry and regulator recognized aging and
drive cycle testing protocols at independent certified testing
facilities. Updates on results expected by mid-year 2015.
- Reinforced the strength of its advanced materials platform with
20 patent applications filed in the fourth quarter and two patents
awarded for Spinel™, CDTi's breakthrough clean emissions exhaust
technology. CDTi filed a total of 65 patent applications in 2014
and anticipates filing many more in 2015.
- Achieved significant progress validating and optimizing CDTi's
powder processing capability in advance of scaling up to commercial
quantities in the coming months. This progress is key to achieving
the powder-to-coat capability that will enable CDTi to provide its
highly enabling technologies to catalyst coaters around the
world.
"2015 promises to be an exciting year for CDTi. We believe we
have a strong platform on which to grow the business. Our long
track record of innovation and leadership in the catalyst market
provides both commercial and technology synergies with our advanced
materials strategy. Initial OEM feedback on our strategy and
new business model is most encouraging. In fact, we intend to
secure our first customer for our enabling catalytic powders in the
second half of the year. We are eagerly anticipating the initial
results of our vehicle test program, which we believe will
demonstrate to global OEMs the compelling value proposition of our
breakthrough technology. Meanwhile, we expect DuraFit™ to
follow the classic new product growth curve and ramp its sales
throughout 2015 more so in the second half. To support these
exciting initiatives, we will continue to maintain a prudent cost
structure," concluded Harris.
Financial Highlights – Fourth Quarter 2014 compared to
2013
- Total revenue was $8.7 million compared to $14.4 million.
- Catalyst division revenue was $5.5 million compared to $5.9
million due to lower intercompany catalyst sales and a reduction in
service parts for out-of-production vehicles. Intercompany sales
are eliminated in consolidation.
- Heavy Duty Diesel Systems division revenue was $3.5 million
compared to $9.4 million due to the decrease in retrofit
demand.
- Gross margin was 22.7% compared to 32.6% for the year-ago
quarter, reflecting lower volumes and launch costs associated with
the DuraFit™ rollout.
- Total operating expenses were $5.1 million compared to
operating expenses of $5.9 million in the fourth quarter of
2013.
- Net loss was $2.7 million, or $0.20 per share. This compares to
a loss of approximately $2.5 million, or $0.27 per share, in the
same period last year.
- The weighted average common shares outstanding were 13.5
million in the current quarter compared to 9.3 million in the
fourth quarter of 2013. The increase in the number of shares was
due principally to the equity offerings completed in April 2014 and
November 2014.
- Cash at December 31, 2014 was $7.2 million, compared with $3.9
million at December 31, 2013.
David Shea, CDTi's CFO, stated: "In the fourth quarter, we took
action to further strengthen our financial and operating
foundation. We divested our standard exhaust parts business in
October, better aligning our assets with our future vision for the
company. We raised $4.4 million in gross proceeds in an offering of
common stock and warrants to support our working capital needs
while we execute on our advanced materials strategy. We amended all
$7.5 million in loan agreements with Kanis S.A. to extend the
maturity dates to October 1, 2016. In addition, one of the loans,
the $3 million Convertible Note, is no longer callable by the
lender. Looking ahead, we will continue to evaluate opportunities
to improve our balance sheet and financial flexibility to position
us for growth."
Financial Highlights – Full Year 2014 compared to
2013
- Total revenue was $41.2 million compared to $51.8 million.
- Catalyst division revenue was $23.7 million compared to $25.8
million. Intercompany sales are eliminated in consolidation.
- Heavy Duty Diesel Systems division revenue was $19.6 million
compared to $29.1 million.
- Gross margin was 30.2%, compared to 28.9%.
- Total operating expenses were $20.1 million, compared to $19.3
million.
- Net loss was $9.3 million, or $0.78 per diluted share, and
included a loss of $223,000, or $0.02 per share from discontinued
operations, compared to net loss of $7.1 million, or $0.86 per
share, and included a loss of $255,000, or $0.03 per share, from
discontinued operations, in 2013.
- Weighted average common shares outstanding were 12.0 million
for the year ended December 31, 2014 compared to 8.3 million for
the prior year.
2015 Outlook
"2015 will be a pivotal year as we further invest in our
advanced materials strategy. While we do not expect to record
revenue from this strategy in 2015, we believe it will enable us to
drive profitable growth in 2016 and beyond. To enable analysts
and our investors to better model the company and track our
progress, we will be providing annual guidance. In 2015, we expect
revenue of between $40 million and $45 million depending on the
timing of the ramp up of DuraFit™, as compared to $41.2 million in
2014. We expect a gross margin of between 25% and 28% approaching
the 30% achieved in 2014, due to continued startup costs and supply
chain inefficiencies. As DuraFit™ scales throughout 2015, we expect
margins to improve in the back half of the year as we optimize our
supply chain," concluded Shea.
Conference Call and Webcast Information
CDTi will host a conference call and simultaneous webcast over
the Internet beginning at 8:00 a.m. Pacific Time today to discuss
its financial results and its business outlook. This conference
call will contain forward-looking information. To participate in
the conference call, dial +1 877 303 9240 and use conference code
88133346. International participants should dial +1 760 666
3571 and use the same conference code. The conference call will be
webcast live on CDTi's website at www.cdti.com under the "Investor
Relations" section. To listen to the live webcast, participants
should visit the site at least 15 minutes prior to the conference
to download any required streaming media software. An archived
recording of the conference call will be available on the CDTi
website for 30 days and a full transcript for one year.
About CDTi
CDTi manufactures and distributes vehicle emissions control
products that leverage its advanced materials technology. CDTi
utilizes its proprietary patented Mixed Phase Catalyst (MPC®)
technology and other related technologies to provide high-value
sustainable solutions to reduce emissions, increase energy
efficiency and lower the carbon intensity of on- and off-road
combustion engine systems. Reflecting its continued focus on
innovation, CDTi is developing and commercializing proprietary
advanced low-platinum group metal (PGM) catalysts including
synergized-PGM (SPGM™), as well as zero-PGM (ZPGM™) catalysts. CDTi
is headquartered in Oxnard, California and has operations in the
U.K., Canada, France, Japan and Sweden. For more information,
please visit www.cdti.com.
Forward-Looking Statements
Certain information contained in this press release constitutes
forward-looking statements for purposes of the safe harbor
provisions of The Private Securities Litigation Reform Act of 1995.
Any statements contained herein that are not statements of
historical fact should be considered forward-looking statements.
You can identify these forward-looking statements by the use of the
words "believes", "expects", "anticipates", "plans", "may", "will",
"would", "intends", "estimates", and other similar expressions,
whether in the negative or affirmative. Forward-looking statements
are based on a series of expectations, assumptions, estimates and
projections which involve substantial uncertainty and risk. In this
document, the Company includes forward looking statements regarding
(a) emerging markets; (b) expected sales, growth, results,
opportunities, investments and supply chain optimization; (c)
annual cost savings; (d) strategies and initiatives; (e) technology
leadership; (f) OEM relationships; (g) product commercialization;
(h) expected patent application filings; (i) anticipated
scale-ups and technology development; (j) maintenance of a prudent
cost structure; (k) improvement of balance sheet and financial
flexibility; and (l) effects of products. In general, actual
results may differ materially from those indicated by such
forward-looking statements as a result of risks and uncertainties,
including, but not limited, to (i) that the Company may not be able
to (a) decrease costs, (b) increase sales, (c) obtain adequate
funding, (d) retain or secure customers, (e) protect its
intellectual property, (f) successfully evolve into an advanced
materials supplier or, even if successful, increase profitability,
(g) implement strategic priorities, (h) successfully market new
products; (i) obtain product verification or approvals or
market acceptance, (j) attract or retain key personnel, or (k)
realize benefits from investments; (ii) PGM and rare earth metal
price fluctuations; (ii) royalty and other restrictions on sales in
certain Asian countries; (iv) supply disruptions or failures; (v)
regulatory, marketing and competitive factors; (vi) environmental
harm or damages resulting from product faults or failures; and
(vii) other risks and uncertainties discussed or referenced in the
Company's filings with the Securities and Exchange Commission,
including its most recent Annual Report on Form 10-K. In addition,
any forward-looking statements represent the Company's estimates
only as of the date of such statements and should not be relied
upon as representing the Company's estimates as of any subsequent
date. The Company specifically disclaims any obligation to update
forward-looking statements. All forward-looking statements in this
press release are qualified in their entirety by this cautionary
statement.
Clean Diesel
Technologies, Inc. |
Summary Statements of
Operations (unaudited) |
($
millions) |
|
|
|
|
|
|
3 Months
Ended December 31, |
Year
Ended December 31, |
|
2014 |
2013 |
2014 |
2013 |
Revenues |
$ 8.7 |
$ 14.4 |
$ 41.2 |
$ 51.8 |
Gross profit |
2.0 |
4.7 |
12.5 |
15.0 |
Gross margin |
22.7% |
32.6% |
30.2% |
28.9% |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Selling, general and administrative |
3.2 |
3.4 |
12.4 |
13.4 |
Research and development |
1.9 |
1.3 |
6.5 |
4.7 |
Severance and other charges |
-- |
1.2 |
1.2 |
1.2 |
Total operating expenses |
$ 5.1 |
$ 5.9 |
$ 20.1 |
$ 19.3 |
|
|
|
|
|
Loss from continuing operations |
$ (3.1) |
$ (1.2) |
$ (7.6) |
$ (4.3) |
Other income (expense) |
0.4 |
(0.6) |
(1.4) |
(2.2) |
Loss from continuing operations before income
tax |
(2.7) |
(1.8) |
(9.0) |
(6.5) |
Income tax expense (benefit) from continuing
operations |
(0.1) |
0.4 |
0.1 |
0.3 |
Net loss from continuing operations |
(2.6) |
(2.2) |
(9.1) |
(6.8) |
Discontinued operations |
(0.1) |
(0.3) |
(0.2) |
(0.3) |
Net loss |
$ (2.7) |
$ (2.5) |
$ (9.3) |
$ (7.1) |
|
|
|
|
|
Basic and diluted EPS |
$ (0.20) |
$ (0.27) |
$ (0.78) |
$ (0.86) |
Weighted shares outstanding (in
millions) |
13.5 |
9.3 |
12.0 |
8.3 |
|
Clean Diesel
Technologies, Inc. |
Segment
Information |
($
millions) |
|
|
|
|
|
|
3 Months
Ended December 31, |
Year
Ended December 31, |
|
2014 |
2013 |
2014 |
2013 |
Revenue |
|
|
|
|
Heavy Duty Diesel Systems |
$ 3.5 |
$ 9.4 |
$ 19.6 |
$ 29.1 |
Catalyst |
5.5 |
5.9 |
23.7 |
25.8 |
Eliminations |
(0.3) |
(0.9) |
(2.1) |
(3.1) |
Total |
$ 8.7 |
$ 14.4 |
$ 41.2 |
$ 51.8 |
|
|
|
|
|
Income (loss) from continuing operations |
|
|
|
|
Heavy Duty Diesel Systems |
$ (0.1) |
$ 0.7 |
$ 0.2 |
$ 0.9 |
Catalyst |
(1.4) |
0.2 |
(0.8) |
1.0 |
Corporate |
(1.5) |
(2.2) |
(6.9) |
(6.4) |
Eliminations |
(0.1) |
0.1 |
(0.1) |
0.2 |
Total |
$ (3.1) |
$ (1.2) |
$ (7.6) |
$ (4.3) |
|
Clean Diesel
Technologies, Inc. |
Summary Balance Sheets
(unaudited) |
($
millions) |
|
|
|
As of
December 31 |
|
2014 |
2013 |
Total current assets |
$ 18.5 |
$ 16.8 |
Total assets |
$ 28.3 |
$ 28.4 |
Total current liabilities |
$ 13.5 |
$ 14.7 |
Total long-term liabilities |
$ 7.8 |
$ 8.3 |
Stockholders' equity |
$ 7.0 |
$ 5.4 |
|
|
|
Short-term debt |
$ 2.8 |
$ 2.3 |
Long-term debt |
$ 7.5 |
$ 7.5 |
CONTACT: Becky Herrick or Cathy Mattison
LHA (IR Agency)
+1 415 433 3777
bherrick@lhai.com
cmattison@lhai.com
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